"Our focus on profitability started to pay off and operating margin for the group gradually improved in 2013, despite significant currency headwind, driven primarily by improvements in Networks and Network Rollout," CEO Hans Vestberg said in a statement.

Sales fell in northeast Asia following a drop in investments in the GSM telecom system in China and a slowdown in business in Japan and South Korea. The group's North American sales were also cut in half in the CDMA business, a different system used for mobile phone access.

Ericsson said it would continue with cost cutting measures, particularly in Sweden.

At 6.41 billion kronor, the group's fourth quarter revenue fell short of analysts' expectations of 7.22 billion kronor. The Swedish company's annual turnover also remained stable at just over 67 billion kronor, despite receiving a sizeable settlement in a licensing dispute with the South Korean mobile giant Samsung.

The group's shares were up 3.49 percent on the Stockholm Stock Exchange at 1300 GMT in an overall market down by 0.66 percent.